Sandy victims cheated: Feds say reports altered to deny insurance claims

Sandy victims cheated: Feds say reports altered to deny insurance claims
Borough Hall

Revelations that systemic fraud cheated thousands of Hurricane Sandy victims out of insurance claims unleashed a storm of anger and calls for justice in hard-hit Southern Brooklyn.

Federal officials admitted over the weekend that engineering reports showing flood damage were altered so that insurance companies could deny claims, and said the government is working to settle hundreds of resulting lawsuits.

One Gerritsen Beach couple whose claim was denied based on an altered report was fortunate enough to have gotten evidence of the original determination, according to the couple’s lawyer.

“He was smart enough to take a picture with his iPhone,” said Benjamin Pinczewski, who represents Vincent and Terri Ann Carrozza — whose flood insurance company claimed the damage to their home after the superstorm wasn’t from the flooding but was “preexisting” structural damage.

Pinczewski said the engineer hired to survey the damage by the couple’s insurance company, Travelers, initially determined that the damage was from flooding, but the report was later changed, and the company denied the Carrozza’s claim.

“[The engineer] said it was flood damage — he wrote a report, and then Vincent was told that the report didn’t say that,” he said.

A spokesman for Travelers declined to comment of their claim for privacy reasons.

On the March 1 edition of “60 Minutes,” a Federal Emergency Management Agency official said that insurance companies used fraudulent reports to deny thousands of Sandy victims’ claims.

Brad Kieserman, the agency’s deputy associate administrator for insurance, said he has seen engineering reports that were altered so that — as in the Carrozzas’ case — reports that originally said homes were damaged from flooding were changed to say the destruction wasn’t related to water damage, so that victims didn’t receive full payouts from their insurance companies.

The head of the Department of Homeland Security, which oversees the relief agency, said he has asked the department’s inspector general to investigate the extent of the fraud and recommend ways to correct it.

“FEMA has expressed its deepest concern about allegations regarding the integrity of the claims adjustment processes currently under litigation, and it has encouraged a full review of insurance company adjustment and engineering practices to ensure fair treatment of flood survivors,” said secretary Jeh C. Johnson. “In addition, FEMA has requested the DHS Office of Inspector General not only investigate allegations of fraud but also review and make recommendations on FEMA’s flood insurance oversight role.”

The relief agency is currently working to settle 1,200 lawsuits from residents who say they were victims of the fraud. But senators Charles Schumer and Kirsten Gillibrand want the settlement should apply to all residents whose engineering reports were altered — whether they filed a lawsuit or not.

The senators said the agency’s settlement should extend to all residents whose claims were denied because of altered engineering reports from HiRise Engineering, P.C. — which handled the Carrozza’s claim — U.S. Forensic, Llc, and any other firms that were implicated in the alleged fraud.

Borough President Adams and councilmen Alan Maisel (D–Marine Park) and Mark Treyger (D–Coney Island) joined the Carrozzas for a press conference at their home on Keen Court on March 1, urging Sandy victims whose insurance claims were denied to resubmit them — and pushing State Attorney General Eric Schneiderman to appoint a special monitor to ensure the claims are treated fairly.

“We’ve called upon the attorney general,” said Treyger, who heads the Council’s Committee on Recovery and Resiliency. “We really believe there has to be a designated monitor or Sandy team to handle these cases.”

Maisel said the oversight is overdue, and could have prevented the fraud in the first place.

“There was really nobody looking at the insurance companies over their shoulders saying, ‘You guys aren’t doing the right thing,’ ” said Maisel, adding that many of his constituents had long suspected foul play. “We’ve been hearing this for two years,” said Maisel. “It is one big outrageous scam against the people.”

Reach reporter Vanessa Ogle at vogle@cnglocal.com or by calling (718) 260–4507. Follow her attwitter.com/oglevanessa.